We examine the empirical relationship between early employment activity and school continuation decisions for young American women using a dynamic, sequential discrete-choice framework that estimates schooling, labor supply, and birth decisions jointly, controlling for unobserved heterogeneity and the endogeneity of these life cycle decisions. That the rate of school withdrawal increases as work intensity rises helps explain the higher departure rates of Hispanic girls from secondary school and the premature departure of young black women from college. The disturbing implication is that youth employment induces long-run wage stagnation for early school leavers and potentially increases race and ethnic inequities.

We examine changes in the characteristics of American youth between the late 1970s and the late 1990s, with a focus on characteristics that matter for labor market success. The current generation is more skilled than the previous one. Blacks and Hispanics have gained relative to whites, and women have gained relative to men. However, the skill distribution has widened overall. Shifts in parental education generate many of the observed changes. We also provide speculative estimates suggesting that if recent trends in technology and the supply of human capital continue, wage inequality will increase substantially by 2025.

In this article, we examine optimal job choices when jobs differ in the rate at which they reveal information about workers’ skills. We then analyze how the optimal level of experimentation changes over a worker’s career and characterize job transitions and wage growth over the life cycle. Using the Dictionary of Occupational Titles merged with the National Longitudinal Survey of Youth 1979, we then construct an index of how much information different occupations reveal about workers’ skills and document patterns of occupational choice and wage growth that are consistent with a trade-off between information and wages.

Evidence on wage cyclicality shows job changers have more procyclical wages than job stayers. Previous work argued this arises because workers gain greater access to jobs in sectors such as manufacturing that offer high wages. This article argues that workers who switch jobs in booms enter temporary jobs with unemployment risk and are merely compensated for subsequent losses. I demonstrate that the two explanations can be distinguished using the relationship between unemployment insurance and wage cyclicality among job changers. The evidence supports the compensation hypothesis; that is, that job changers might not experience real gains from higher-paying jobs in booms.

This article compares various measures of on-the-job training, from a new source that matches establishments and workers, allowing us to compare the responses of employers and employees to identical training questions. Establishments report 25% more hours of training than do workers, although workers and establishments report similar incidence rates of training. Both establishment and worker measures agree that there is much more informal training than formal training. Further, informal training is measured about as accurately as formal training. Finally, we show that measurement error reduces substantially the observed effect of training, in particular the effect of training on productivity growth

According to human capital theory, technological change will influence the retirement decisions of older workers in two ways. First, workers in industries with high rates of technological change will retire later if there is a net positive correlation between technological change and on-the-job training. Second, an unexpected change in the rate of technological change will induce older workers to retire sooner because the required amount of retraining will be an unattractive investment. We matched industry data on productivity growth and occupational data on required training with data from the National Longitudinal Surveys of Older Men to test these hypotheses. Our results support both hypotheses.

Since technological change influences the rate at which human capital obsolesces and also increases the uncertainty associated with human capital investments, training may increase or decrease at higher rates of technological change. Using the National Longitudinal Survey of Youth, we find that production workers in manufacturing industries with higher rates of technological change are more likely to receive formal company training. At higher rates of technological change, the training gap between the more and less educated narrows, low-skilled nonproduction workers receive significantly more training than higher-skilled nonproduction workers, and the proportion of individuals receiving training increases.

More mothers engage in marketplace work today than ever before, with over 33% returning to work by the time their child is 3 months old. This article identifies the effects of maternal marketplace work in the initial months of an infant's life on the child's development. Results suggest that such work in the first year of a child's life has detrimental effects. Where significant, the results also indicate negative effects of maternal employment in the child's first quarter of life. However, the negative effects of maternal marketplace work are partially offset by positive effects of increased family income. EconLit database, Copyright: 2003, American Economic Association.

We evaluate the effect of child care versus maternal time inputs on child cognitive development using single mothers from the NLSY79. To deal with nonrandom selection of children into child care, we exploit the exogenous variation in welfare policy rules facing single mothers. In particular, the 1996 welfare reform and earlier state-level policy changes generated substantial increases in their work/child care use. We construct a comprehensive set of welfare policy variables and use them as instruments to estimate child cognitive ability production functions. In our baseline specification, we estimate that a year of child care reduces child test scores by 2.1%.

Data and measurement problems have complicated the debate over trends in job instability in the United States. We compare two cohorts of young white men from the National Longitudinal Surveys (NLS), construct a rigorous measure of job change, and confirm earlier findings of a significant increase in job instability. We then benchmark the NLS against other main data sets in the field and conduct a thorough attrition analysis. Extending the analysis to wages, we find that the wage returns to job changing have both declined and become more unequal for young adults, mirroring trends in their long-term wage growth.

The Impact of School Resources on Women's Earnings and Educational Attainment: Findings from the National Longitudinal Survey of Young Women
Journal of Labor Economics 19,3 (July 2001): 635-657.
Also: http://www.jstor.org/stable/10.1086/322076
Cohort(s):
Young Women
Publisher:
University of Chicago PressKeyword(s):
Earnings; Educational Attainment; High School; Racial Differences; Wages, Women; Wages, Young Women; Women's Education

The article measures the impact of high school resources on women's educational attainment and earnings. No link emerges between education and school resources as measured by the pupil-teacher ratio, spending per pupil, teachers' starting salaries, or books per student. For white women, no significant connection between school resources and wages is found. But school inputs are in several cases significantly and positively related to black women's wages. Wage elasticities with respect to school inputs are uniformly larger for black women. Finally, the impact of school resources on earnings remains constant or in some cases weakens as workers grow older. Copyright: University of Chicago, acting through its Press.

Bibliography Citation

Betts, Julian R. "The Impact of School Resources on Women's Earnings and Educational Attainment: Findings from the National Longitudinal Survey of Young Women ." Journal of Labor Economics 19,3 (July 2001): 635-657.

Existing studies of the effects of college quality on wages typically rely on a single proxy variable for college quality. This study questions the wisdom of using a single proxy given that it likely contains substantial measurement error. We consider four econometric approaches to the problem that involve the use of multiple proxies for college quality: factor analysis, instruments variables, a method recently proposed by Lubotsky and Wittenberg, and a GMM estimator. Our estimates suggest that the existing literature understates the wage effects of college quality and illustrate the value of using multiple proxies in this and other similar contexts.

During the 1980s there were sharp increases in the return to schooling estimated with conventional wage regressions. An analysis explores whether the relationship between ability and schooling changed over this period in ways that would have increased the schooling coefficient in these regressions. The empirical results reject the hypothesis that an increase in the bias of the schooling coefficient, due to a change in the relationship between ability and schooling, has contributed to observed increases in the return to schooling. It is also found that the increase in the schooling return has occurred for workers with relatively high levels of academic ability. This implies that existing estimates of the increase in the return to schooling overstate increases in the true incentive for the marginal individual to acquire schooling. Supply-side explanations are plausible in explaining an increase in the return to education for high-ability workers only. (ABI/Inform)

Bibliography Citation

Blackburn, McKinley L. and David B. Neumark. "Omitted-Ability Bias and the Increase in the Return to Schooling." Journal of Labor Economics 11,3 (July 1993): 521-544.

The primary objective of this paper is to demonstrate that the union-nonunion wage differential is a function of two effects. The bargaining effect indicates the differential between the wage received by a nonunion member of a collective bargaining unit and the wage received by a comparably productive individual in the absence of collective bargaining. The differential arises, in large part, from the bargaining monopoly power of organized labor. The membership effect is the wage differential within a bargaining unit between union and nonunion members. Holding other productivity-affecting factors constant, if this latter effect exists, it may be attributed to a process of socialization and indirect economic benefits which unionism brings to the work place. An important benefit to union members is the receipt of relatively more specific on-the-job training, a necessary inducement to negate the benefits of free riding. A seniority scheme that encourages the payment of wages below the employee's valued contribution to output during his early work-life and greater during later years will benefit workers with relatively long tenure. Such a remuneration scheme will reward one who acquires specific training. The authors find that union members have a 30 to 38 percent wage advantage over comparable nonmembers of a collective bargaining unit. In addition, their analysis indicates that about 11 to 13 percent of this differential can be attributed to the membership (training) effect. In addition, the results of the analysis shed light on the two arguments that union-nonunion wage differences result from quality-adjustment behavior on the part of the employer and the differences are simply a compensation for a lower quality of work environment.

A general equilibrium search framework is used to examine the role of gender differences in labor market behavior patterns (e.g., quit rates for personal reasons) in determining gender wage differentials. For samples of high school and college graduates from the National Longitudinal Survey of Youth (NLSY), these behavioral patterns are found to be significantly different across the sexes and account for 20%-30% of the wage differentials. In particular, they play a key role in explaining the male-female wage differential that remains after controlling for the gender composition across occupations.

Using National Longitudinal Survey of Youth data on tenure and wages, this article analyzes the extent to which the level of job mismatching varies over the business cycle and how it is dealt with by the labor market. I find significant cyclical variation in job match quality and an internalization of the variation by the labor market through wages. Mismatching occurs more during recessions but is primarily captured in starting wages. The evidence suggests the cyclical phenomenon is one of general mismatching rather than an increased number of stopgap jobs during recessions.

For young male immigrants, naturalization facilitates assimilation into the U.S. labor market. Following naturalization, immigrants gain access to public-sector, white-collar, and union jobs, and wage growth accelerates. These findings are consistent with the proposition that naturalization fosters labor market success of immigrants by removing barriers to employment. Although the faster wage growth of immigrants who naturalize might alternatively be explained by greater human capital investment prior to naturalization, stemming from a long-term commitment to U.S. labor markets, there is no evidence that wage growth accelerates or that the distribution of jobs improves until after citizenship is attained. Finally, the gains from naturalization are greater for immigrants from less-developed countries and persist when we control for unobserved productivity characteristics of workers.

This article develops and estimates a model of wage determination that isolates the effects of alcohol use on wages as mediated through human capital accumulation. Although generally insignificant, estimation results suggest that moderate alcohol use while in school or working has a positive effect on the returns to education or experience, and therefore on human capital accumulation, but heavier drinking reduces this gain slightly. Based on these results, alcohol use does not appear to adversely affect returns to education or work experience and therefore has no negative effect on the efficiency of education or experience in forming human capital.

This paper discusses the quality of job tenure data within two longitudinal data sets, the PSID and the NLS (Older Men and Young Men). It focuses on two major issues facing researchers using these data sources, namely: (1) the ability to identify distinct jobs within each data set; and (2) the choice of how and whether to clean the data to ensure that tenure and time increment by the same amount within jobs. The following four problems are highlighted: (1) The use of error- ridden tenure data to identify job changes may seriously reduce the reliability of estimates that require precise information about job changes. Estimates of the effect of job change on wage growth and the effects of many covariates on the probability of job separation appear especially sensitive to this problem. (2) Researchers who must identify job changes from tenure responses are likely to overstate the precision of their estimates, because standard errors (as conventionally computed) do not account for the effect of partition error on parameter estimates. (3) The failure to use internally consistent tenure sequences can lead to misleading conclusions about the slope of wage-tenure profiles. It does not appear to matter how internal consistency is imposed, as long as it is done. (4) The inclusion of jobs that contain unusually inconsistent tenure responses can alter the results in certain applications. Methods for utilizing these data are offered and recommendations for improvements in the PSID and NLS survey instruments suggested.

The Nonequivalence of High School Equivalents
Journal of Labor Economics 11,1 (January 1993): 1-47.
Also: http://www.jstor.org/stable/2535183
Cohort(s):
NLSY79
Publisher:
University of Chicago PressKeyword(s):
High School Completion/Graduates; High School Diploma; High School Dropouts; High School Students; School Completion; School Dropouts; Schooling, Post-secondary; Test Scores/Test theory/IRT; Training

This article analyzes the causes and consequences of the growing proportion of high-school-certified persons who achieve that status by exam certification rather than through high school graduation. Exam-certified high school equivalents are statistically indistinguishable from high school dropouts. Whatever differences are found among examcertified equivalents, high school dropouts and high school graduates are accounted for by their years of schooling completed. There is no cheap substitute for schooling. The only payoff to exam certification arises from its value in opening postsecondary schooling and training opportunities, but completion rates for exam-certified graduates are much lower in these activities than they are for ordinary graduates.

Bibliography Citation

Cameron, Stephen V. and James J. Heckman. "The Nonequivalence of High School Equivalents." Journal of Labor Economics 11,1 (January 1993): 1-47.

This study examines changes in returns to formal education and cognitive skills over the past 20 years using the 1979 and 1997 waves of the National Longitudinal Survey of Youth. We show that cognitive skills had a 30%-50% larger effect on wages in the 1980s than in the 2000s. Returns to education were higher in the 2000s. These developments are not explained by changing distributions of workers' observable characteristics or by changing labor market structure. We show that the decline in returns to ability can be attributed to differences in the growth rate of technology between the 1980s and 2000s.

I develop a model in which individual time discount rates have a larger effect on human capital accumulation when credit constraints are binding. Impatient individuals obtain less schooling when borrowing constraints limit the ability to finance consumption during school. Using data from the NLSY79, I show that self-reported measures of time preferences have a significantly higher effect on the college attendance decisions of blacks than those of whites and the decisions of low-income youths than those of high-income youths. These results provide new evidence that members of disadvantaged groups obtain lower levels of schooling because they are credit constrained.

A substantial empirical literature documents the rise in wage inequality in the American economy. It is silent on whether the increase in inequality is due to components of earnings that are predictable by agents or whether it is due to greater uncertainty facing them. These two sources of variability have different consequences for both aggregate and individual welfare. Using data on two cohorts of American males, we find that a large component of the rise in inequality for less skilled workers is due to uncertainty. For skilled workers, the rise is less pronounced.

Workers who are more impatient search less intensively and set lower reservation wages. The effect of impatience on exit rates from unemployment is therefore unclear. If agents have exponential time preferences, the reservation wage effect dominates for sufficiently patient individuals, so increases in impatience lead to higher exit rates. The opposite is true for agents with hyperbolic time preferences. Using two large longitudinal data sets, we find that impatience measures are negatively correlated with search effort and the unemployment exit rate and are orthogonal to reservation wages. Impatience substantially affects outcomes in the direction predicted by the hyperbolic model.

This article investigates the relationship between employment and the use of marijuana and cocaine for males in National Longitudinal Survey of Youth data from 1984 and 1988. Previous studies yielding mixed evidence may have inadequately accounted for the simultaneity between drug consumption and employment. I implement an instrumental variable procedure that identifies drug use with variables that are empirically unrelated to employment, including the regional cocaine price and a state marijuana decriminalization indicator. Results indicate that the use of each drug substantially reduces the likelihood of employment. Exogeneity tests reveal that standard probit estimates are severely biased toward zero.

We examine how students of varying abilities sort (and are sorted) into colleges of varying qualities. Our data indicate substantial amounts of both
academic undermatch (high ability students at low quality colleges) and academic overmatch (low ability students at high quality colleges).
Student application and enrollment decisions, rather than college admission decisions, drive most deviations from academic assortative matching. Financial constraints, information, and the public college options facing students all affect this sorting, but mainly via the college quality rather than
the match between ability and quality. More informed students attend higher quality colleges, even when doing so involves overmatching.

We use data from the National Longitudinal Surveys to investigate the relative importance of family financial and human capital in the transition into self-employment. Specifically, we estimate the impacts of individual's own wealth and human capital and parental wealth and self-employment experience on the probability that an individual transits from wage-and-salary to self-employment. We find young men's own financial assets exert a statistically significant but quantitatively modest effect on the transition. In contrast, parents' capital exerts a large influence. Parents' strongest effect runs, not through financial means, but rather through their own self-employment experience and business success.

This article provides estimates on how long it takes for released inmates to find a job and, when they find a job, how less likely they are to be incarcerated. An on-the-job search model with crime is used to model criminal behavior, derive the estimation method, and analyze policies including a job placement program. The results show that the unemployed are incarcerated twice as fast as the employed and take on average 6 months to find a job. The article demonstrates that reducing the average unemployment spell of previously incarcerated criminals by 3 months reduces crime and recidivism by more than 5%.

Theoretical models of self-employment posit that attitudes toward risk, entrepreneurial ability, and preferences for autonomy are central to the individual's decision between self-employment and wage/salary work. I provide indirect evidence on this hypothesis by examining the relationship between drug dealing as a youth and legitimate self-employment in later years using data from the National Longitudinal Survey of Youth. I find that drug dealers are 11%-21% more likely to choose self-employment than non-drug-dealers, all else equal. After ruling out a few alternative explanations, I interpret these results as providing indirect evidence supporting the hypothesis.

A large sample of jobs from the National Longitudinal Survey of Youth is used to examine job mobility patterns and to evaluate theories of interfirm worker mobility. There are three main findings. First, the monthly hazard of job ending is not monotonically decreasing in tenure as most earlier work using annual data has found, but it increases to a maximum at 3 months and declines thereafter. Second, mobility is strongly positively related to the frequency of job change prior to the start of the job. Finally, job change in the most recent year prior to the start of the job is more strongly related than earlier job change to mobility on the current Job.

This paper tests the hypothesis that the classifications "unemployed" and "out of the labor force" are behaviorally meaningless distinctions. This hypothesis is rejected. Distinct behavioral equations govern transitions from out of the labor force to employment and from unemployment to employment. The evidence reported in this paper is broadly consistent with versions of search theory in which unemployment is a state that facilitates the job search process. In an appendix, the authors demonstrate that log concavity of the wage-offer distribution implies that the exit rate from unemployment is an increasing function of the rate of arrival of job offers.

This article estimates a dynamic model of fertility and labor supply of married women drawn from the National Longitudinal Survey of Young Women, 1968-91. It distinguishes part-time and full-time employment sectors, which differ by pecuniary and nonpecuniary returns and transferability of human capital. The model with unobserved heterogeneity in earning ability and preferences for children fits the data and produces reasonable forecasts of labor force participation in decisions. The estimates unpack important features of the persistence in labor market decisions, intertemporal substitution of leisure over the life cycle, and the effect of work interruptions, due to childbirth, on lifetime utility.

This paper examines how measurement error biases longitudinal estimates of union effects. It develops numerical examples, statistical models, and econometric estimates which indicate that measurement error is a major problem in longitudinal data sets. There are three major findings: (1) the difference between the cross-section and longitudinal estimates is attributable in large part to random error in the measurement of who changes union status. Given modest errors of measurement, of the magnitudes observed, and a moderate proportion of workers changing union status, also of the magnitudes observed, measurement error biases downward estimated effects of unions by substantial amounts; (2) longitudinal analysis of the effects of unionism on nonwage and wage outcomes tends to confirm the significant impact of unionism found in cross-section studies, with the longitudinal estimates of both nonwage and wage outcomes lower in the longitudinal analysis than in the cross-section analysis of the same data set; and (3) the likely upward bias of cross-section estimates of the effect of unions and the likely downward bias of longitudinal estimates suggests that, under reasonable conditions, the two sets of estimates bound the "true" union impact posited in standard models of what unions do.

This article investigates the sequential college attendance decision of young women and quantifies the effect of marriage expectations on their decision to attend and graduate from college. A dynamic choice model of college attendance, labor supply, and marriage is formulated and structurally estimated using panel data from the NLSY79. The model is used to simulate the effects of no marriage benefits and finds that the predicted college enrollment rate will drop from 58.0% to 50.5%. Using the estimated model, the college attendance behavior for a younger cohort from the NLSY97 is predicted and used to validate the behavioral model.

Authors often add covariates to a base model sequentially either to test a particular coefficient's "robustness" or to account for the "effects" on this coefficient of adding covariates. This is problematic, due to sequence sensitivity when added covariates are intercorrelated. Using the omitted variables bias formula, I construct a conditional decomposition that accounts for various covariates' role in moving base regressors' coefficients. I also provide a consistent covariance formula. I illustrate this conditional decomposition with NLSY data in an application that exhibits sequence sensitivity. Related extensions include instrumental variables, the fact that my decomposition nests the Oaxaca-Blinder decomposition, and a Hausman test result.

We develop a model in which a worker's skills determine the worker's current wage and sector. The market and the worker are initially uncertain about some of the worker's skills. Endogenous wage changes and sector mobility occur as labor market participants learn about these unobserved skills. We show how the model can be estimated using nonlinear instrumental variables techniques. We apply our methodology to study wages and allocation of workers across occupations and industries using individual-level panel data from the National Longitudinal Survey of Youth. We find that high-wage sectors employ high-skill workers and offer high returns to workers' skills. [ABSTRACT FROM AUTHOR]

This study establishes empirically a positive but nonlinear relationship between weekly hours and hourly wage growth. For workers who put in over 47 hours per week, 5 extra hours are associated with a 1% increase in annual wage growth. This correlation is not present when hours are lower. The relationship is especially strong for young professionals. Data on promotions provide evidence in support of a job-ladder model that combines higher skill sensitivity of output in higher-level jobs with heterogeneous preferences for leisure. The results can be used to account for part of the gender wage gap.

Bibliography Citation

Gicheva, Dora. "Working Long Hours and Early Career Outcomes in the High-End Labor Market." Journal of Labor Economics 31,4 (October 2013): 785-824.

Workers in cities earn 33% more than their nonurban counterparts. A large amount of evidence suggests that this premium is not just the result of higher ability workers living in cities, which means that cities make workers more productive. Evidence on migrants and the cross effect between urban status and experience implies that a significant fraction of the urban wage premium accrues to workers over time and stays with them when they leave cities. Therefore, a portion of the urban wage premium is a wage growth, not a wage level, effect. This evidence suggests that cities speed the accumulation of human capital.

To investigate the problem of widespread youth crime, a time allocation model in which consumers face parametric wages and diminishing marginal returns to crime is analyzed. The theory motivates an econometric model that is estimated using data from the National Longitudinal Survey of Youth. Estimates suggest that youth behavior is responsive to price incentives and that falling real wages may have been an important determinant of rising youth crime during the 1970s and 1980s. Moreover, wage differentials explain a substantial component of both the racial differential in criminal participation and the age distribution of crime.

A structural econometric model of retirement of dual-career couples is specified and estimated with panel data from the National Longitudinal Survey of Mature Women. A coincidence of spouses retiring together, despite the younger ages of wives, suggests explicit efforts at coordination. The estimates suggest that one reason is a correlation of tastes for leisure. More important, each spouse, and perhaps husbands in particular, values retirement more once their spouse has retired. The opportunity set accounts for peaks in the retirement hazards of each spouse individually but not for peaks in the simultaneous retirement of both spouses.

Using three sources of data, this article examines the direct economic return to General Educational Development (GED) certification for both native and immigrant high school dropouts. One data source—the Current Population Survey (CPS)—is plagued by nonresponse and allocation bias from the hot deck procedure that biases the estimated return to the GED upward. Correcting for allocation bias and ability bias, there is no direct economic return to GED certification. An apparent return to GED certification with age found in the raw CPS data is due to dropouts becoming more skilled over time. These results apply to both native-born and immigrant populations.

This article establishes that a low-dimensional vector of cognitive and noncognitive skills explains a variety of labor market and behavioral outcomes. Our analysis addresses the problems of measurement error, imperfect proxies, and reverse causality that plague conventional studies. Noncognitive skills strongly influence schooling decisions and also affect wages, given schooling decisions. Schooling, employment, work experience, and choice of occupation are affected by latent noncognitive and cognitive skills. We show that the same low-dimensional vector of abilities that explains schooling choices, wages, employment, work experience, and choice of occupation explains a wide variety of risky behaviors.

Bibliography Citation

Heckman, James J., Jora Stixrud and Sergio Urzua. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior." Journal of Labor Economics 24,3 (July 2006): 411-482.

We show that the reported tendency for performance pay to be associated with greater wage inequality at the top of the earnings distribution applies only to white workers. This results in the white-black wage differential among those in performance pay jobs growing over the earnings distribution even as the same differential shrinks over the distribution for those not in performance pay jobs. We show that this remains true even when examining suitable counterfactuals that hold observables constant between whites and blacks. We explore reasons behind our finding focusing on the interactions between discrimination, unmeasured ability, and selection.

The effect of maternal employment on child development is examined using fixed effects models. Hausman tests suggest that ordinary least squares models produce biased and inconsistent estimates. Fixed effects results show that only one of three tests (PIAT math) was negatively affected by maternal hours and weeks worked in year 1 of the child's life. The PIAT reading score was negatively affected by weeks worked in year 1 but not hours worked in year 1. None of the tests were affected by weeks or hours worked in year 2. Finally, weeks worked in year 3 positively affected PIAT math scores. [ABSTRACT FROM AUTHOR]

The data are from the National Longitudinal Survey of Youth's Mother-Child data from 1979 to 1994.

We assess changing patterns of migration and their association with labor outcomes for the 1979 and 1997 cohorts of the NLSY. Although the long-distance migration rate is lower in the 1997 cohort, we find that migration fell mostly because return migration fell. We uncover little difference in patterns of selection into migration in the two cohorts, little difference in correlation between migration and labor market outcomes, and little evidence in either cohort of a positive labor market return to migration. Our findings suggest that reductions in geographic mobility do not explain the poor recent labor market performance of young adults.

In this article, I propose and estimate a dynamic model of education, borrowing, and work decisions of high school graduates. I examine the effect of relaxing borrowing constraints on educational attainment by simulating increases in the amount students are permitted to borrow from government-sponsored loan programs. My results indicate that borrowing constraints have a small impact on attainment: the removal of education-related borrowing constraints raises bachelor’s degree completion by 2.4 percentage points. Tuition subsidies are necessary to obtain larger increases: I find that higher subsidies for average-ability students are the most cost effective targeted tuition subsidies.

This article develops a model, with deferred compensation and severance pay, that predicts that workers bear all the costs and receive all the returns of human capital investments and that specific investments yield higher returns than general investments. This model also predicts that pensions, which efficiently defer compensation, will be positively related to specific investments. Evidence from the National Longitudinal Survey of Older Men confirms these predictions; participation in company-sponsored training programs, proxying for specific investments, increases the probability of pension receipt and the level of benefits. More general training outside the firm has much smaller effects on pensions.

This article explores the measurement of labor force dynamics using longitudinal data, focusing in particular on the Canadian Labour Market Activity Survey (LMAS), which represents a potential advance in longitudinal data collection because it measures aspects of dynamics not available in existing panel data such as the Panel Study of Income Dynamics and the National Longitudinal Survey. The authors examine the implications of the LMAS questionnaire structure--the LMAS filter--for the study of labor market dynamics and undertake simulations to provide a quantitative assessment of the importance of this filter for labor force spells and transitions between labor force states.

This paper examines the effects of cocaine and marijuana use on the wages of a sample of young adults drawn from the NLSY. The results suggest that, for this sample, increased use of marijuana and cocaine is associated with higher wages. The positive relationship between drug use and wages does not diminish with age, but remains substantially positive. The author also investigates whether systematic differences in the return to measures of investments in human capital can explain the observed positive relationship between drug use and wages. The results do not support that hypothesis.

Bibliography Citation

Kaestner, Robert. "The Effect of Illicit Drug Use on the Wages of Young Adults." Journal of Labor Economics 9,4 (October 1991): 381-412.

In this article, we provide quantitative evidence on the effects of monetary incentive schemes designed to reduce racial differences in school attainment and earnings. Our analysis is based on the structural estimation of a dynamic model of schooling, work, and occupational choice decisions over the life cycle. We consider two recent proposals that, although not specifically targeted to blacks, can be expected to have differential racial impacts. One proposal, suggested by Robert Reich, provides a high school graduation bonus to youths from lower-income families. The other, suggested by Edmund Phelps, provides wage subsidies to low-wage workers.

We analyze data from the National Longitudinal Survey of Youth 1979 on high school completion, smoking, and obesity. First, we investigate whether GED recipients differ from other high school graduates in their smoking and obesity behaviors. Second, we explore whether the relationships between schooling and these health-related behaviors are sensitive to controlling for background and ability measures. Third, we estimate instrumental variables models. Our results suggest that the returns to high school completion may include less smoking but the health returns to GED receipt are much smaller. We find little evidence that high school completion is associated with less obesity.

Neither birth order nor family size significantly influences a person's future level or growth rate of wages. For women, however, family size exerts an important effect on future employment status. Women from small families work less than women from large families when they are young (aged 14 to 22) and more than women from large families when they are more mature (aged 22 to 30). This is at least partially attributable to the influence of family size on women's childbearing behavior, which affects their labor force participation decisions. The reduced-form effect of family size on women's employment status is economically interesting and comparable to the effects of other family background characteristics. The lack of significant birth-order effects on achievement found in reduced-form estimation does not imply that a person's birth order is unimportant. (ABI/Inform)

The 1986 Immigration Reform and Control Act (IRCA) granted amnesty to approximately 1.7 million long-term unauthorized workers in an effort to bring them "out of the shadows" and improve their labor market opportunities. An analysis of wages using panel data for a sample of legalized men provides evidence that wage determinants are structurally different after amnesty for them but not for the comparison group as measured during the same time periods. The wage penalty for being unauthorized is estimated to range from 14% to 24%. The wage benefit of legalization under IRCA was approximately 6%.

Bibliography Citation

Kossoudji, Sherrie A. and Deborah A. Cobb-Clark. "Coming Out of the Shadows: Learning about Legal Status and Wages from the Legalized Population." Journal of Labor Economics 20,3 (July 2002): 598-628.

This article provides theoretical and empirical analyses of a firing costs model with adverse selection. Our theory suggests that, as firing costs increase, firms increasingly prefer hiring employed workers, who are less likely to be lemons. Estimates of re-employment probabilities from the National Longitudinal Survey of Youth support this prediction. Unjust-dismissal provisions in U.S. states reduce the re-employment probabilities of unemployed workers relative to employed workers. Consistent with a lemons story, the relative effects of unjust-dismissal provisions on the unemployed are generally smaller for union workers and those who lost their previous jobs due to the end of a contract. [ABSTRACT FROM AUTHOR]

This paper presents the results of a survey of micro, ordinary least squares, cross-section studies of the union/onunion wage gap in the public sector with the aim of providing mean gap estimates for that sector that are more or less comparable to those for the economy as a whole. The survey covers seventy-five studies and deals with several estimation problems involved with interpreting those studies .

Students often accumulate substantial work experience before leaving school. Because conventional earnings functions do not control for in-school work experience, their estimates of the return to schooling include the benefit of work experience gained along the way. Using data from the National Longitudinal Survey of Youth, I estimate wage models with and without controls for in-school work experience. The estimated schooling coefficients are 25%-44% higher (depending on how I control for ability bias) when in-school work experience is omitted than when it is included. These findings indicate that conventional models significantly overstate the wage effects of "school only."

We investigate an unexplored avenue through which unemployment insurance increases unemployment. As unemployment insurance benefits rise, workers lose incentive to "preempt" impending layoffs by changing jobs. We formalize this prediction in a job search model and investigate it empirically by estimating a proportional hazard model with data from the 1979 National Longitudinal Survey of Youth, using state- and year-specific algorithms to compute each worker's expected unemployment insurance benefits. Our estimates reveal that an exogenous increase in benefits deters job quits by a small but statistically significant amount.

This article estimates a wage model that includes an array of variables measuring the fraction of time worked during each year of the career. This array fully characterizes past employment experience, regardless of how sporadic it has been. Our model yields substantially higher estimated returns to experience and lower returns to tenure than do models that measure experience cumulatively and use the standard quadratic functional form. Findings show that the data reject the standard model but fail to reject our model. Furthermore, findings indicate that 12% of the male-female wage gap is due to differences in the timing of work experience.

Using NLS data on Young Men and Young Women born between 1944 and 1952, the authors estimate proportional hazard models in order to learn whether it is more difficult for employers to identify female non-quitters than male non-quitters. It was found that women may be a higher risk than men in the overall sample because they are relatively more likely to be "movers" for unobserved reasons and because they tend to quit for reasons that cannot be observed ex ante (such as the birth of a child). When focus was on a relatively recent birth cohort, however, the authors found that women have lower quit rates than men and that the men are more likely to be the "movers."

Data from the National Longitudinal Survey of Youth indicate that the employer often pays the explicit costs of not only on-site training but also off-site general training. Although few of these costs appear to be passed on to workers in the form of a lower wage while in training, completed spells of general training paid for by previous employers have a larger wage effect than completed spells of general training paid for by the current employer. A model where contract enforcement considerations cause employers to share the costs and returns to purely general training can explain these findings. Copyright is not claimed for this article.

Bibliography Citation

Loewenstein, Mark A. and James R. Spletzer. "Dividing the Costs and Returns to General Training." Journal of Labor Economics 16,1 (January 1998): 142-171.

The explanation typically given for longer tenure among workers who use informal contacts to find jobs is that relatives and friends reduce uncertainty about the quality of the match between worker and employer. An alternative explanation is that workers rely on informal information sources as a last resort. Such workers remain at their current jobs mainly because they have few alternative choices rather than because of better match quality. This article shows that the two different explanations are simultaneously valid for different types of contacts and can account for differences in the wage effects of job contacts.

An empirical model is developed of adolescent premarital childbearing in which a woman's decisions affect a sequence of outcomes: premarital pregnancy, pregnancy resolution, and the occurrence of marriage before the birth. State welfare, abortion, and family planning policies alter the costs and benefits of these outcomes. For white adolescents, welfare, abortion, and family planning policy variables have significant effects on these outcomes consistent with theoretical expectations. Black adolescents' behavior shows no association with the policy variables. The different racial results may reflect differences in sample size or important unmeasured racial differences in factors that influence fertility and marital behavior. (ABI/Inform)

Models of employer learning have two implications: first, the distribution of wages becomes more dispersed as a cohort of workers gains experience; second, the coefficient on an ability correlate that employers initially do not observe grows with experience. If learning by employers varies across occupations, both of these indicators of learning should covary positively across groups defined by a worker’s initial occupational assignment. This paper tests these implications using data from the NLSY79 and CPS. I find that there is significant heterogeneity in the employer learning process across occupations and that occupational assignment affects the learning process independently of education.

A wage offer can be either acceptable or unacceptable to a worker, but in cross-sectional and panel data only acceptable wage offers are observed. An OLS wage equation will not reveal how job tenure affects wage offers but rather will reveal how tenure affects acceptable wage offers. By jointly modeling the firm's determination of the wage offer and the worker's decision to accept or reject the offer, the authors are able to estimate the effect of job tenure on wage offers consistently. In contrast to the usual OLS results, it was found that job tenure has no statistically significant effect on wage offers.

Labor supply and household membership are systematically related and jointly chosen. The Nash bargaining model of family behavior of McElroy and Horney (1981) is used to specify stochastic structural relationships (two indirect utility functions, a market and a reservation wage function) that jointly determine work consumption, and household membership. The maximum likelihood estimates of the implied trinomial probit model differ sharply from those obtained when either market work or household membership is taken as exogenous. This application to white male youths from a matched sample drawn from three National Longitudinal Surveys shows the insurance function of families. Parents insure their sons against poor market opportunities: in the face of poor market opportunities a son may return to his parents' household. His parents share in the utility loss and thereby cushion the son's utility loss.

Theoretical economic models, official labor force statistics, and most empirical studies of young workers disregard employment experience of students under age 16. Evidence from several sources, however, suggests that students ages 14 and 15 acquire substantial employment experience. Moreover, that experience is vastly different for black and white youths. Several policy-related issues, including causes of black-white differences in adult earnings, may deserve to be interpreted differently in the light of differentials in early employment experience. This employment experience of 14- and 15-year-olds in general and its racial pattern in particular should not continue to be ignored.

In this paper the standard cross-sectional static model of labor supply is modified to make the wage endogenous, and a joint wage-hours model is estimated. The econometric technique addresses the nonlinearity of the budget constraint by approximating the constraint by a series of discrete points. The results show that the budget constraint is indeed nonlinear, that hours affect the wage quadratically, that true wage elasticities are lower as a result, and that the model fits the hours distribution much better than the standard Tobit model.

The model of job search involves both employer matches and career matches. Workers may change employers without changing careers but cannot search over possible lines of work while working for one employer. The optimal policy implies a two-stage search strategy in which workers search over types of work first. The patterns of job changes observed in the National Longitudinal Survey of Youth supports this two-stage search policy. Among male workers who are changing jobs, those who have previously changed employers while working in their current career are much less likely to change careers during the current job change.

This article examines the effect of Catholic secondary schooling on high school graduation rates, college graduation rates, and future wages. The article introduces new measures of access to Catholic schools that serve as potential instruments for Catholic school attendance. Catholic secondary schools are geographically concentrated in urban areas, and Catholic schooling does increase educational attainment significantly among urban minorities. The gains from Catholic schooling are modest for urban whites and negligible for suburban students. Related analyses suggest that urban minorities benefit greatly from access to Catholic schooling primarily because the public schools available to them are quite poor. (Copyright 1997 by The University of Chicago. All rights reserved.)

This paper examines the extent to which changes in the characteristics of men and women in the labor force account for the continuing sex differential in wages. Utilizing data from the NLS of Young Women and Mature Women, it was found that: (1) changes in skill level (measured by a decline in women's average years of schooling) and an increase in both job tenure and overall work experience underlie observed patterns of change in the pay gap; (2) high levels of unemployment coupled with the depression of wages of less experienced workers work to widen the hourly pay gap; and (3) changes over time in the wage gap differ by age and race.

Bibliography Citation

O'Neill, June E. "The Trend in the Male-Female Wage Gap in the United States." Journal of Labor Economics 3,1 (January 1985): S91-S116.

A simple dynamic model of statistical discrimination is developed and tested. The model improves on earlier static models both by allowing ex ante uncertainty about worker productivity to be resolved as on-the-job performance is observed and by generating several testable empirical implications. These predictions are tested using a sample of young men from the National Longitudinal Survey of Youth, producing mixed evidence for the model. The main empirical result is that no black- white wage gap exists at labor force entry but that one develops as experience accumulates, mainly because blacks reap smaller gains from job mobility. Photocopy available from ABI/INFORM 13362.00

Bibliography Citation

Oettinger, Gerald S. "Statistical Discrimination and the Early Career Evolution of the Black-White Wage Gap." Journal of Labor Economics 14,1 (January 1996): 52-78.

Industry-Specific Capital and the Wage Profile: Evidence from the National Longitudinal Survey of Youth and the Panel Study of Income Dynamics
Journal of Labor Economics 18,2 (April 2000): 306-323.
Also: http://www.jstor.org/stable/10.1086/209960
Cohort(s):
NLSY79
Publisher:
University of Chicago PressKeyword(s):
Firms; Industrial Classification; Panel Study of Income Dynamics (PSID); Wages

Using data from the National Longitudinal Survey of Youth (1979-96) and the Panel Study of Income Dynamics (1981-91), I seek to determine whether there is any net positive return to tenure with the current employer once we control for industry-specific capital. Including total experience in the industry as an additional explanatory variable, I show that the return to seniority is markedly reduced using GLS while it virtually disappears using IV-GLS, at both the one-digit and three-digit levels. Therefore, it seems that what matters most for the wage profile in terms of human capital is industry-specificity, not firm-specificity.

Bibliography Citation

Parent, Daniel. "Industry-Specific Capital and the Wage Profile: Evidence from the National Longitudinal Survey of Youth and the Panel Study of Income Dynamics." Journal of Labor Economics 18,2 (April 2000): 306-323.

Using data from the National Longitudinal Survey of Youth, this article examines the impact of employer-provided training on the wage profile and on the mobility of young workers. The main results are that: 1. training with the current employer has a positive effect on the wage, 2. employers seem to reward skills acquired through training with previous employers as much as skills they provide themselves, and 3. part of the skills acquired through training programs provided by the current employer seem to be fairly specific as they are shown to reduce mobility, even after controlling for unobserved heterogeneity.

In this article, I present structural estimates of a search model that flexibly incorporates general human capital accumulation along with career and firm choice, where a career is empirically identified as a combination of industry and occupation. I use these estimates to empirically distinguish between the relative importance of various factors for generating wage growth over the life cycle. Evidence presented in the article highlights the importance of considering the two-stage search process that originates from the model. In particular, I demonstrate that previous instrumental variables methods dramatically underestimate the importance of firm-specific matches for wage growth.

Since 1976, the gender gap in wages on average declined about one percent per year. This article focuses on identifying the factors underlying this trend. Three data sets are analyzed--the Current Population Survey, the Panel Study of Income Dynamics, and the National Longitudinal Survey. The authors find that convergence in measurable work-related characteristics (schooling and work experience) explains one-third to one-half the narrowing. The remainder is attributable to a relative increase in women's returns to experience as well as to declining wages in blue-collar work and other factors.

This article examines the resource allocations of parents in the form of both shared residence with and financial transfers to their young adult sons. Based on an overlapping generations model incorporating a game between parents and adult children, estimates of the determinants of such transfers are obtained from the kinship-linked cohorts of the National Longitudinal Surveys. The estimates suggest that both types of parental assistance are as important as governmental transfers in supporting young men and are responsive to the current and anticipated earnings of their offspring, suggesting that young men cannot adequately smooth their consumption without parental help.

Bibliography Citation

Rosenzweig, Mark R. and Kenneth I. Wolpin. "Intergenerational Support and the Life-Cycle Incomes of Young Men and Their Parents: Human Capital Investments, Coresidence, and Intergenerational Financial Transfers ." Journal of Labor Economics 11,1, Part 1: Essays in Honor of Jacob Mincer (January 1993): 84-112.

This study examines how high school employment affects future economic attainment. There is no indication that light to moderate job commitments ever have a detrimental effect; instead, hours worked during the senior grade are positively correlated with future earnings, fringe benefits, and occupational stems. These gains occur even though employed seniors attain slightly less education than their counterparts. The results are robust across a variety of specifications and suggest that student employment increases net investments in human capital particularly toward the end of high school and for females. The University of Chicago. All rights reserved.

What can account for the differences in marriage and employment decisions across blacks and whites? To answer this question, I develop a dynamic, equilibrium model of marriage. Two explanations for the racial differences in behavior are considered: differences in population supplies and wages. Black‐white differences in population supplies explain one‐fifth of the difference in marriage rates and between one‐fifth and one‐third of the differences in employment rates across race. Removing the racial gap in wages eliminates the differences in employment but increases the differences in marriage rates.

The primary goal of this work is to specify and estimate a structural simultaneous job search model and then determine the empirical importance of simultaneous search. The results indicate that new labor force entrants search simultaneously. A secondary goal is to identify and estimate job offer arrival rates and wage offer rejection probabilities separately. The results indicate that a significant portion of unemployment spells is caused by slow arrival rates, but policies intended to speed arrival rates would increase the average length of unemployment spells.

This article extends the research on school quality by focusing on the structural effects of high school quality on earnings. I specify a model of college choice and earnings determination that captures two separate effects of school quality on earnings. First, school quality affects a high school student's choice of college. College choice, in turn, affects the individual's postschool earnings. Second, the additional skills accumulated via a higher quality high school directly influence wages. The results suggest that high school quality influences earnings by affecting college choice behavior, while the direct effect of school quality on earnings is less evident.

Bibliography Citation

Strayer, Wayne Earle. "The Returns to School Quality: College Choice and Earnings." Journal of Labor Economics 20,3 (July 2002): 475-503.

This paper investigates the role of mechanical ability as a determinant of school decisions and labor market outcomes. Using a Roy model of with multiple unobserved abilities and longitudinal data from the NLSY79, we find that this ability has a positive effect on overall earnings. However, in contrast to cognitive and socio-emotional, mechanical ability reduces the likelihood of attending a four-year college. The rationale for this asymmetry comes from its large estimated impact of earnings conditional on not attending four-year college. Our findings highlight the importance of moving beyond the one-size-fits-all discourses to offer individuals alternative educational pathways to successful careers.

The Family Gap for Young Women in the United States and Britain: Can Maternity Leave Make a Difference?
Journal of Labor Economics 16,3 (July 1998): 505-545.
Also: http://www.jstor.org/stable/10.1086/209897
Cohort(s):
NLSY79
Publisher:
University of Chicago PressKeyword(s):
Britain, British; Cross-national Analysis; Family Studies; Fertility; Leave, Family or Maternity/Paternity; Marital Status; Maternal Employment; NCDS - National Child Development Study (British); Re-employment; Wage Effects; Wages, Young Women

In the United States and Britain, there is a 'family gap' between the wages of mothers and other women. Differential returns to marital and parental status explain 40-50 percent of the gender gap. Another 30-40 percent is explained by women's lower levels of work experience and lower returns to experience. Taking advantage of 'quasi experiments' in job-protected maternity leave in the United States and Britain, this article finds that women who had leave coverage and returned to work after childbirth received a wage premium that offset the negative wage effects of children.

Bibliography Citation

Waldfogel, Jane. "The Family Gap for Young Women in the United States and Britain: Can Maternity Leave Make a Difference?" Journal of Labor Economics 16,3 (July 1998): 505-545.

Using a confidential version of the NLSY79, we estimate large effects of neighborhood social characteristics and job proximity on labor market activity. A variety of neighborhood social characteristics are associated with less market work. Social characteristics have nonlinear effects, with the greatest impact in the worst neighborhoods. Social characteristics are also more important for less-educated workers. Exploiting the panel aspects of our data, we find that estimates that do not account for neighborhood selection on the basis of time-invariant and time-varying unobserved individual characteristics substantially overstate the social effects of neighborhoods but understate the effects of job access. [ABSTRACT FROM AUTHOR]

This article constructs and estimates a model of wage bargaining with on-the-job search to explore three different components of wages: general human capital, match-specific capital, and outside options. As the workers find better job opportunities, the current employer has to compete with outside firms to retain them. This between-firm competition results in wage growth even when productivity remains the same. The model is estimated by a simulated minimum distance estimator and data from the 1979 National Longitudinal Study of Youth. The results indicate that the improved value of the outside option raises wages by 14%–16% in the first 5 years.

This article proposes a new approach to modeling heterogeneous human capital using task data from the Dictionary of Occupational Titles. The key feature of the model is that it departs from the Roy model, which treats occupations as distinct categories and conceives of occupations as bundles of tasks. The advantages of this approach are that it can accommodate many occupations without computational burden and provide a clear interpretation as to how and why skills are differently rewarded across occupations. The model is structurally estimated by the Kalman filter using the National Longitudinal Survey of Youth 1979.